Bài tập marketing management

18b Product line“Firms may decide to split their product mix into groups known as product lines.A product line is a number of products grouped together based on similar characteristics.T

Bài tập marketing Management

CONTENT

1 Explain the following:

(a) Production concept

Philip Kotler and Kevin Lane Keller wrote: “The production concept is one of

the oldest concepts in business It holds that consumers prefer products that are widely available and inexpensive Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, and mass distribution This orientation makes sense in developing countries such as China, where the largest PC manufacturer, Legend (principal owner of Lenovo Group), and domestic appliances giant Haier take advantage of the country’s huge and inexpensive labor pool to dominate the market Marketers also use the production concept when they want to expand the market” (Philip Kotler, Kevin Lane Keller, 2012, p 18)

(b) Product line

“Firms may decide to split their product mix into groups known as product lines

A product line is a number of products grouped together based on similar characteristics The characteristic used to split products, will depend on the firm and its product strategy They include product price, product quality, who the product is aimed at (target group), and product specification/features For example Samsung's mobile phones are divided into product lines based on the following features; touch screens, slider/folders, QWERTY keyboards and bar phones Product lines help firms manage their products as product strategy can be designed around product lines This is useful if the firm has a large product mix as there is less need to concentrate on individual product type strategy.” (Product strategy, 2014)

(c) Augmented product

“Consumers often think that a product is simply the physical item that he or she buys In order to actively explore the nature of a product further, let’s consider it as three

different products – the core product, the actual product, and finally the augmented product This concept is known as the Three Levels of a Product

The augmented product is the non-physical part of the product It usually consists

of lots of added value, for which you may or may not pay a premium So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car’s manufacturer and any after-sales service The augmented product is

an important way to tailor the core or actual product to the needs of an individual customer The features of augmented products can be converted in to benefits for individuals.” (Three Levels of a Product, 2014)

(d) Societal marketing concept

Philip Kotler wrote: “Some have questioned whether the marketing concept is

an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services Are companies that successfully satisfy consumer wants necessarily acting in the best, long-run interests of consumers and society? The marketing concept side steps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare

Yet some firms and industries are criticized for satisfying consumer wants at society’s expense Such situations call for a new term that enlarges the marketing concept We propose calling it the societal marketing concept, which holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being

The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices They must balance and juggle the often conflicting criteria of company profits, consumer want satisfaction, and public interest Yet a number of companies have achieved notable sales and profit gains by adopting and practicing the societal marketing concept.” (Philip Kotler 2002, p.14)

Body Shop is a cosmetic company found by Anita Roddick The company uses only vegetable based materials for its products It is also against Animal testing, supports community trade, activate Self Esteem, Defend Human Rights, and overall protection of the planet Thus it is completely following the concept of Societal Marketing

Ariel is a detergent manufactured by Procter and Gamble Ariel runs special fund raising campaigns for deprived classes of the world specifically the developing countries

It also contributes part of its profits from every bag sold to the development of the society

British American tobacco Company (BAT) is a British based Tobacco company

It was found in the year 1902 BAT is involved in working for the society in every part of the world It conducts tree plantation drives as part of its societal marketing strategy (What Is Societal Marketing Concept And Give Its 3 Example? , 2014)

2 Explain various concepts of marketing with suitable examples.

There are five competing concepts under which organizations conduct marketing activities: production concept, product concept, selling concept, marketing concept, and societal marketing concept Below, these concepts are defined according to Philip Kotler

(a) The Production Concept: see answer sentence 1.a

(b) The Product Concept

The Product Concept “holds that consumers favor those products that offer the most quality, performance, or innovative features Managers in these organizations focus

on making superior products and improving them over time, assuming that buyers can appraise quality and performance

Product-oriented companies often design their products with little or no customer input, trusting that their engineers can design exceptional products A General Motors executive said years ago: “How can the public know what kind of car they want until they see what is available?” GM today asks customers what they value in a car and includes marketing people in the very beginning stages of design

However, the product concept can lead to marketing myopia Railroad management thought that travelers wanted trains rather than transportation and overlooked the growing competition from airlines, buses, trucks, and automobiles Colleges, department stores, and the post office all assume that they are offering the public the right product and wonder why their sales slip These organizations too often are looking into a mirror when they should be looking out of the window (Philip Kotler

2002, p.11)

(c) The Selling Concept

“The selling concept, another common business orientation, holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s products The organization must, therefore, undertake an aggressive selling and promotion effort This concept assumes that consumers must be coaxed into buying, so the company has a battery of selling and promotion tools to stimulate buying

The selling concept is practiced most aggressively with unsought goods—goods that buyers normally do not think of buying, such as insurance and funeral plots The selling concept is also practiced in the nonprofit area by fund-raisers, college admissions offices, and political parties

Most firms practice the selling concept when they have overcapacity Their aim

is to sell what they make rather than make what the market wants In modern industrial economies, productive capacity has been built up to a point where most markets are buyer markets (the buyers are dominant) and sellers have to scramble for customers Prospects are bombarded with sales messages As a result, the public often identifies marketing with hard selling and advertising But marketing based on hard selling carries high risks It assumes that customers who are coaxed into buying a product will like it; and if they don’t, that they won’t bad-mouth it or complain to consumer organizations and will forget their disappointment and buy it again These are indefensible assumptions

In fact, one study showed that dissatisfied customers may bad-mouth the product to 10 or

more acquaintances; bad news travels fast, something marketers that use hard selling should bear in mind.” (Philip Kotler 2002, p.11)

(d) The Marketing Concept

The marketing concept emerged in the mid-1950s as a customer-centered, sense-and-respond philosophy The job is to find not the right customers for your products, but the right products for your customers Dell doesn’t prepare a perfect computer for its target market Rather, it provides product platforms on which each person customizes the features he or she desires in the computer

The marketing concept holds that the key to achieving organizational goals is being more effective than competitors in creating, delivering, and communicating superior customer value to your target markets Harvard’s Theodore Levitt drew a perceptive contrast between the selling and marketing concepts:

Selling focuses on the needs of the seller; marketing on the needs of the buyer Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and finally consuming it

Several scholars found that companies embracing the marketing concept at that time achieved superior performance." (Philip Kotler, Kevin Lane Keller, 2012, p.18)

(d) The Societal Marketing Concept: see answer sentence 1.d

3 Explain market segmentation with suitable examples.

Market segmentation is a part of a company's marketing strategy It is the process of dividing a large target market into smaller, more homogeneous groups of customers that you can get more efficient market

There are 3 reasons that today businesses are focused on finding the best market segmentation for yourself:

-The consumer demand is huge, no businesses can meet all demand although it

is a global corporations

-Customer split more higher with every passing day based on age, style, income.

If they don't segment they can not create the products satisfying consumers

-Based on the strength and resources of its own, each business can focus all resources to best meet consumer demand

There are 4 main factor for market segmentation: geographic, demographics, psychographic, behavior:

-Geography: geographic segmentation is used by companies that sell products or service specific to a certain community, state, region, country or group of countries In Vietnam, they can divide into segment North, Central, South area; urban, rural, If company have enough force it can serve in many different areas, but should pay attention

to the difference of customers in each region

- Demographic: business simply divides the larger market into groups based on several defined traits Age, race, gender, marital status, occupation, education and income are among the commonly considered demographics segmentation traits A example, a company that sells feminine hygiene products will include "female" in its description of its primary market segment

- Psychographics: personality, social class, lifestyle,

- Behavioral: segmentation is based on user behaviors such as when do customers buy product, number of times use the product, how to make decisions, the degree of loyalty to the product, A company may have customers with a similar demographic make up but distinct behavioral tendencies Some may use the product daily, while others use it weekly or monthly Higher-income earners may have more interest in quality products versus low-cost products This may prompt the provider to target higher-end products and services to one group and more value-oriented offerings to lower-income or budget-conscious customers

Some examples of market segments :

- Toyota company has Lexus and Toyota brands Lexus is the luxury cars are sold mainly in rich countries like Europe and America Toyota has a variety of kind that

sell in the rest Manufacturing plants are located in the appropriate position for the optimal price

- The banks in Vietnam issue many kind of ATM and credit cards for many objects who have different incomes Dong A Bank issue a ATM cards for some colleges They are not only ATM card but also a student's card with suitable preferential treatment for students

-Viettel get income segment Initially they focused on developing prepaid telecommunication services for rural areas, low -income areas That is areas where VNPT less concerned After Viettel dominate market in this region, they continued to expand

in other areas where VNPT dominate As a result, Viettel continued success

4 “PLC as a tool for marketing strategy" justify.

A product has a life cycle because: i)- Products have a limited life; ii)- Product sales pass through distinct stages with different challenges, opportunities, and problems for the seller; iii)- Profits rise and fall at different stages of the product life cycle; and iv)-Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each stage

This PLC curve is typically divided into four stages:

-Introduction: Because it takes time to roll out a new product and find dealer, sales growth tends to be slow at this stage During this period, the interest rate can be negative or very low because of high cost (example: distribution cost , advertising)

- Growth: A period of rapid market acceptance and substantial profit improvement

- Maturity: A period of a slowdown in sales growth because the product has achieved acceptance by most potential buyers Profits stabilize or decline because of increased competition

-Decline: The period when sales show a downward drift and profits erode

Summary of Product Life Cycle Characteristics, Objectives, and Strategies

Introduction Growth Maturity Decline Characteristics

Sales Low sales Rapidly rising

sales

Peak sales Declining sales

Costs High cost per

customer

Average cost per customer

Low cost per customer

Low cost per customer

Profits Negative Rising profits High profits Declining

profits

Customers Innovators Early adopters Middle majority Laggards

number

Stable number beginning to decline

Declining number

Marketing

Objectives

Create product awareness and trial

Maximize market share

Maximize profit while defending market share

Reduce expenditure and milk the brand

Strategies

Product Offer a basic

product

Offer product extensions, service, warranty

Diversify brands and items

Phase out weak models

Price Charge

cost-plus

Price to penetrate market

Price to match

or best competitors’

Cut price

Distribution Build selective

distribution

Build intensive distribution

Build more intensive distribution

Go selective: phase out unprofitable outlets

Advertising Build product

awareness among early adopters and dealers

Build awareness and interest in the mass market

Stress brand differences and benefits

Reduce to level needed to retain hard-core loyal

Sales

Promotion

Use heavy sales entice trial

Reduce to take advantage of heavy consumer demand

Increase to encourage brand switching

Reduce to minimal level

(Philip Kotler 2002, p.172)

Marketing Strategies through the PLC:

a)-Introduction Stage

When introducing new products to market, marketing managers can set different levels of marketing elements, such as price, distribution, promotion Considering price and promotion, there are four strategic options that can be pursued

- Rapid skimming strategy is the strategy of launching new products to the market with high initial price and strong promotion Company set high prices to get high gross profit per unit of product Company costs more for advertising, promotions,

increasing market penetration rate This strategy is often be applied in cases the product are unknown in most potential markets or who were known the product they desired buying it and paying high price or company want to create preference brand

- Slow skimming strategy is the strategy of launching new products to the market with high initial price and slow promotion Company set high prices to get high gross profit per unit of product, promote slowly to keep low marketing cost Therefore company will skim more profit on the market This strategy is applied in limited market size; most market know products and customers ready pay high price; potential competition is not capable of happening

- Rapid penetration strategy is the strategy of launching new products to the market with low initial price and strong promotion The company hope to get rapid penetration speed and largest market share This strategy is only appropriate when: the market is large and not known products; most buyers are sensitive to price; the market is implicit intense competition; The company can achieve economies and accumulate productive experience

- Slow penetration strategy is the strategy of launching new products to the market with low initial price and slow promotion Company set low prices to encourage customers acceptance their product, promote slowly to keep low cost (get high gross profit per unit of product) This strategy is only appropriate when: the market is high price elasticity of demand and low promotion elasticity of demand; the market is large size and know product; the market is ability competition

b)-Growth Stage

During the growth stage, profits increase because advertising costs divide on large quantity of products, production costs per unit is further reduced by "accumulated experience" At the end of the growth stage, product increase slow down and the company prepare new strategies for the next stage

During this stage, the company uses several strategies to sustain rapid market growth as long as possible: